Buying Health Insurance at a Government Store

House Democrats are weighing a new proposal in response to Obama’s request for legislation. An outline of the plan obtained by Bloomberg News would require Americans to have insurance with some exceptions.

It would probably exempt those who can prove they can’t find an affordable policy. There could be a tax penalty for those with adequate financial resources who don’t elect to get insurance, according to the outline.

The outline suggests consumers could elect to keep their individual health insurance policies. Still, it says that “by and large” the nation’s market for individually purchased health insurance policies would move to a new federally operated exchange. It would permit both individuals and employees of small firms to buy policies at less expensive group rates.

Let's set aside for a now the fact that such a proposal would require Obama to reverse his position on an individual mandate from the campaign, and just focus on the matter of choice. Under the current system, according to Kaiser Family Foundation data, only about 6 percent of the covered population obtains their insurance on their own. About 31 percent already have government health care of some sort, while 63 percent obtain it through their employers. While Democrats talk of people being able to keep the insurance they want, it won't really be feasible under the system they're proposing. Anybody who receives health care through their employer is limited to whatever health plans their employer chooses under the current flawed system, and if employers decide to start dumping their employees on to the national insurance exchange, then suddenly they'd be losing their plans and forced to pick new ones from the national exchange. And as the article states, at least under this one proposal, the remaining individual market would "by and large" move to the national exchange.

While the promise of the national exchange is that it will be a giant buffet with lots of plans to choose from offering comprehensive coverage at lower rates, without discriminating against those with preexisting conditions, the reality will be a lot different. Government will be running the exchange, offering a government-run plan under Obama's vision, and regulating what participating insurers can or can't cover. To borrow and expand on an analogy once used by Regina Herzlinger, this would be the equivalent of a having everybody purchase their cars at a government auto dealer in which the government dictates what colors cars can be, whether or not they have a leather interior, or heated seats, or satellite radio, or any other features. This isn't reform, it is merely doubling down on the failed system that we already have in place, in which states mandate the type of benefits insurance policies have to cover, driving up the cost of insurance and restricting choice.

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